Apparently, we didn't want it badly enough, is how I'm reading this response from a Sony exec's recent interview with Wired. More after the jump.
In an interview with Wired, Sony Computer Entertainment head of worldwide studios, Shuhei Yoshida weighed in on the issue the company not bringing over the UMD Passport service to the U.S.. If you'll recall, this service allowed PS Vita owners to transfer their PSP titles on UMD to their new handheld (albeit at a cost). Unfortunately, a couple of weeks out from the Vita launch in the U.S. and Europe, Sony scrapped plans to make this service available to gamers in those territories.

Yoshida's explanation: Japanese gamers simply embraced the UMD format more than Western gamers, with what Yoshida sees as a steady stream of new PSP titles still on the way in Japan. He also countered that the potential drawbacks that some adopters of the hardware here in the States and Europe might see in the program being kept in Japan are mitigated by the lower actual costs of PSP software digitally than in Japan, meaning that for the fee you'd pay to participate in the Passport service, you could simply buy a digital copy of the game in question without hassle.